MicroStrategy is also being sued — and local officials say the total amount of funds they're seeking to recover could exceed $100 million.
Listen to the CoinMarketRecap podcast on Apple Podcasts, Spotify and Google Podcasts
Michael Saylor is being sued for tax fraud in Washington DC — amid allegations he's lived there for a decade but has never paid income tax.
DC's Attorney General, Karl A. Racine, also confirmed that MicroStrategy is being sued "for conspiring to help him evade taxes he legally owes on hundreds of millions of dollars."
Announcing the civil action on Twitter, he added:
"With this lawsuit, we're putting residents and employers on notice that if you enjoy all the benefits of living in our great city while refusing to pay your fair share in taxes, we will hold you accountable."
According to Racine, Saylor is a billionaire — and illegally avoided more than $25 million in DC taxes "by pretending to be a resident of other jurisdictions with lower personal income taxes."
The Attorney General is seeking to recover "tens of millions of dollars" in unpaid income taxes and penalties — and this is the first lawsuit brought under a new law that allows whistleblowers who report tax fraud to collect up to 30% of any funds that are retrieved.
Saylor could face substantial penalties if he loses the lawsuit as courts have the ability to impose "treble damages" — three times the amount of the taxes evaded.
Setting out why the entrepreneur is a DC resident, officials noted how he lives in a 7,000 sq ft penthouse on the Georgetown waterfront, has publicly called the neighborhood his home since 2005 and has docked at least two luxury yachts in the area "for long periods of time."
What's Happening?
The case dates back to April 2021, when whistleblowers filed a lawsuit and alleged that Saylor had failed to pay income taxes that were owed between 2014 and 2020.
It's claimed an "elaborate scheme" created the illusion that he lived in Florida — which doesn't have personal income tax — even though he lived in the DC.
But the Office of the Attorney General claims that Saylor didn't file a single income tax return between 2005 and 2021.
For tax purposes, a resident is defined as someone who lives in the District for at least 183 days a year — and the whistleblowers provided "detailed" evidence to back up their claims that he was physically present in DC most of the time, including flight logs from MicroStrategy's corporate jet as well as location-tagged social media posts. Damningly, a statement adds:
"The whistleblowers' complaint also alleges that Saylor openly bragged to friends and acquaintances about evading DC taxes and encouraged others to follow his example."
When it comes to MicroStrategy, the business intelligence firm has been accused of "actively conspiring" with Saylor by filing "inaccurate" forms that listed his property in Florida rather than his home in DC.
Estimates suggest that the unpaid income taxes and penalties that could be owed by Saylor and MicroStrategy could end up totaling more than $100 million.
The court filing doesn't pull any punches, and says:
"The District's income taxes pay for its essential infrastructure, including its schools, its police and fire departments, and the maintenance of its roads, bridges, and waterways. Defendant Saylor enjoyed this infrastructure, these services, and all the other tangible and intangible benefits of living in the District for nearly 20 years. But despite considering the District 'a major center of civilization,' Defendant Saylor refused to pay the taxes he owed."
And it goes on to argue that — as a "highly educated, sophisticated businessman" — Saylor would have known that living in DC meant he was obliged to pay income taxes.
Saylor's own Facebook posts are also included as evidence — including ones where he refers to his luxury penthouse as "home."
He recently stepped down as the MicroStrategy's CEO after 33 years, and now serves as the executive chairman.
MicroStrategy's stock closed down 3.6% — and fell by a further 1.54% in after-hours trading.
